1
00:00:02,520 --> 00:00:13,760
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

2
00:00:13,840 --> 00:00:17,920
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

3
00:00:18,200 --> 00:00:22,000
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

4
00:00:22,360 --> 00:00:25,680
Speaker 1: Listen on demand wherever you get your podcasts, or watch

5
00:00:25,760 --> 00:00:26,960
Speaker 1: us live on YouTube.

6
00:00:27,160 --> 00:00:28,720
Speaker 2: Claudia Sam with us right now.

7
00:00:28,720 --> 00:00:32,320
Speaker 3: And the squishing of the numbers, Claudia, are they squishy

8
00:00:32,400 --> 00:00:36,519
Speaker 3: now because of the pandemic or because of immigration trends

9
00:00:36,800 --> 00:00:38,360
Speaker 3: or do we just need to get used to this

10
00:00:38,440 --> 00:00:39,400
Speaker 3: at the turn of the year.

11
00:00:42,360 --> 00:00:45,800
Speaker 4: Today's data. There's a lot of moving pieces with today's data,

12
00:00:45,920 --> 00:00:48,680
Speaker 4: just because we had large revisions to both the payroll

13
00:00:48,720 --> 00:00:52,199
Speaker 4: employment and the household employment, and you know, and some

14
00:00:52,280 --> 00:00:55,000
Speaker 4: things aren't as comparable from December to January and household

15
00:00:55,040 --> 00:00:57,120
Speaker 4: so this is just a really tricky one to get

16
00:00:57,160 --> 00:00:59,440
Speaker 4: down into the details of it.

17
00:00:59,480 --> 00:01:00,760
Speaker 5: So I wouldn't So it's kind of.

18
00:01:00,680 --> 00:01:02,840
Speaker 4: More of a January effect with like bringing a lot

19
00:01:02,880 --> 00:01:03,760
Speaker 4: of data in.

20
00:01:03,880 --> 00:01:07,119
Speaker 5: But it brought brush. I mean, I agree with your

21
00:01:07,160 --> 00:01:08,440
Speaker 5: characterization the payrolls.

22
00:01:08,440 --> 00:01:10,080
Speaker 4: You got to take that, you know, a set of

23
00:01:10,080 --> 00:01:12,840
Speaker 4: them together, not focus on just this latest number, because again,

24
00:01:12,920 --> 00:01:15,399
Speaker 4: hitting consensus with all these moving pieces was going to

25
00:01:15,400 --> 00:01:18,600
Speaker 4: be tricky today. And those payrolls look good.

26
00:01:18,600 --> 00:01:19,240
Speaker 6: I think it is.

27
00:01:19,920 --> 00:01:24,720
Speaker 4: You know, that's kind of a warm average hourly earnings

28
00:01:25,200 --> 00:01:27,320
Speaker 4: number on the wages. But the other wage data that

29
00:01:27,360 --> 00:01:30,440
Speaker 4: we've gotten has has looked more moderate, So you know,

30
00:01:30,480 --> 00:01:32,360
Speaker 4: there's plenty here to pour through.

31
00:01:32,520 --> 00:01:34,760
Speaker 2: I'm struggling for news here, Paul. I got d x

32
00:01:34,920 --> 00:01:37,199
Speaker 2: Y back to one away, so I got a stronger dollar,

33
00:01:37,360 --> 00:01:40,080
Speaker 2: stronger dollars. Claudia Simon is saying, nobody cares.

34
00:01:39,800 --> 00:01:43,040
Speaker 7: But you know we SMP futures down just thirteen points,

35
00:01:43,400 --> 00:01:45,880
Speaker 7: nasnack down fifty six and to your treasure yield. Iss

36
00:01:45,920 --> 00:01:48,720
Speaker 7: Chonnis is reporting for basis points four and a quarter

37
00:01:48,760 --> 00:01:53,360
Speaker 7: percent right here, Claudia, So what's the next data point here?

38
00:01:53,440 --> 00:01:57,320
Speaker 7: If you have a sense that the labor markets remains solid,

39
00:01:57,360 --> 00:01:59,640
Speaker 7: what's the next data point that you will be looking for?

40
00:01:59,680 --> 00:02:01,120
Speaker 7: And you think the Fed will be looking at.

41
00:02:02,480 --> 00:02:02,640
Speaker 2: Right?

42
00:02:02,680 --> 00:02:05,400
Speaker 4: Well, this very much continues the Feds. You know, the

43
00:02:05,480 --> 00:02:08,040
Speaker 4: labor market's in a good place. We have the luxury

44
00:02:08,080 --> 00:02:10,240
Speaker 4: of time we can wait and see. So what are

45
00:02:10,240 --> 00:02:12,200
Speaker 4: they waiting to see? They're waiting to see what happens

46
00:02:12,200 --> 00:02:15,359
Speaker 4: with inflation? Right, So the next most important data are

47
00:02:15,360 --> 00:02:17,200
Speaker 4: with the CPI and to see if we continue to

48
00:02:17,240 --> 00:02:20,720
Speaker 4: make progress and everything they've got here today kind of

49
00:02:20,840 --> 00:02:23,639
Speaker 4: lets them stay in that, you know, on that trajectory.

50
00:02:24,080 --> 00:02:27,760
Speaker 3: Okay, Claudia, thank you so much. Claudiam just love having

51
00:02:27,800 --> 00:02:30,920
Speaker 3: you with us. Honored around this job's report with New

52
00:02:31,000 --> 00:02:35,120
Speaker 3: Century Advisors. Ellen Zenner's ad a little time to ponder

53
00:02:35,840 --> 00:02:38,000
Speaker 3: the data. I'm going to go back to what the

54
00:02:38,080 --> 00:02:41,280
Speaker 3: hitters are doing. Like in late winter, you don't go

55
00:02:41,320 --> 00:02:44,520
Speaker 3: to Patagonia for fly fishing. You go to the Trinity

56
00:02:44,600 --> 00:02:49,680
Speaker 3: River in California, or the you know, Schinunck or Salmon

57
00:02:49,760 --> 00:02:54,160
Speaker 3: or whatever in Oregon or that. Ellen Zenner. Morgan Stanley

58
00:02:54,240 --> 00:02:58,280
Speaker 3: joins us on the wealth effect. This is where I

59
00:02:58,320 --> 00:03:02,920
Speaker 3: met you years ago was a consumer effect, which is

60
00:03:03,040 --> 00:03:09,080
Speaker 3: now a wealth effect supporting this GDP in this labor economy.

61
00:03:09,240 --> 00:03:11,520
Speaker 2: Have you ever seen a wealth effect like this?

62
00:03:12,440 --> 00:03:14,760
Speaker 8: It's pretty large, it's pretty large.

63
00:03:14,800 --> 00:03:15,320
Speaker 2: I agree.

64
00:03:15,360 --> 00:03:18,000
Speaker 8: Do you want to venture to say how long ago.

65
00:03:17,800 --> 00:03:23,800
Speaker 6: It was that we met three or four years ago? Okay?

66
00:03:24,000 --> 00:03:25,840
Speaker 8: But I'll tell you what I love most about the

67
00:03:25,880 --> 00:03:28,600
Speaker 8: report this morning is listening to the dulcet tones of

68
00:03:28,720 --> 00:03:31,720
Speaker 8: John Tucker read off the numbers I mean, I want

69
00:03:31,800 --> 00:03:34,440
Speaker 8: him to read me payroll numbers each night so that

70
00:03:34,520 --> 00:03:36,119
Speaker 8: I can go to bed like a lullaby.

71
00:03:36,360 --> 00:03:38,080
Speaker 2: Yes, he puts us to sleep here too.

72
00:03:39,200 --> 00:03:42,440
Speaker 3: What do you see in the jobs report around this

73
00:03:42,640 --> 00:03:46,440
Speaker 3: misgust on growth and the wealth effect that we're living.

74
00:03:46,560 --> 00:03:50,720
Speaker 8: Well, the thing is, look, we've been really surprised at

75
00:03:50,760 --> 00:03:55,000
Speaker 8: just how strong the economy has remained even through all

76
00:03:55,120 --> 00:03:57,960
Speaker 8: the FED hikes. And yes, they cut rates one hundred

77
00:03:58,000 --> 00:04:00,760
Speaker 8: basis points, but then you have this tremendous and yields

78
00:04:00,760 --> 00:04:03,280
Speaker 8: which would tighten financial conditions, and you'd think we'd get

79
00:04:03,320 --> 00:04:04,240
Speaker 8: some slowing.

80
00:04:03,920 --> 00:04:04,360
Speaker 6: Out of that.

81
00:04:05,080 --> 00:04:08,160
Speaker 8: And so now you get these revisions and you look

82
00:04:08,200 --> 00:04:11,040
Speaker 8: at the second half of twenty twenty four and it

83
00:04:11,080 --> 00:04:13,880
Speaker 8: looks even stronger in the labor market than what we

84
00:04:13,920 --> 00:04:16,320
Speaker 8: had thought, and looks a bit more in line with

85
00:04:16,400 --> 00:04:19,400
Speaker 8: the strong GDP growth that we were getting. So there's

86
00:04:19,440 --> 00:04:22,680
Speaker 8: just there's just no slowing here. And you know, I

87
00:04:22,760 --> 00:04:26,360
Speaker 8: have to give props to my former team, the US

88
00:04:26,440 --> 00:04:30,160
Speaker 8: economics team at Morgan Stanley Research, because they had one

89
00:04:30,240 --> 00:04:32,680
Speaker 8: forty on. Okay, now, if they were way off, I

90
00:04:32,680 --> 00:04:35,080
Speaker 8: wouldn't mention that, of course, but they had one forty

91
00:04:35,080 --> 00:04:36,600
Speaker 8: because of wild fires.

92
00:04:36,240 --> 00:04:40,000
Speaker 6: And you could definitely, I mean I would be at

93
00:04:40,040 --> 00:04:41,040
Speaker 6: a higher number.

94
00:04:40,760 --> 00:04:42,920
Speaker 8: On Oh I'm sure I would have been way off,

95
00:04:43,000 --> 00:04:48,040
Speaker 8: thanks Tom. But but the you know, these these numbers

96
00:04:48,520 --> 00:04:51,200
Speaker 8: even have the weather effects in there. I mean, you

97
00:04:51,200 --> 00:04:53,279
Speaker 8: can look at the number of people that were right

98
00:04:53,320 --> 00:04:55,680
Speaker 8: the fire that's and the and so you look at

99
00:04:55,680 --> 00:04:57,960
Speaker 8: the number of people that were not at work due

100
00:04:57,960 --> 00:05:01,039
Speaker 8: to natural disaster, weather or that sort of thing, and

101
00:05:01,080 --> 00:05:03,440
Speaker 8: it was outside. So you know that this would have

102
00:05:03,440 --> 00:05:07,280
Speaker 8: been a stronger number without it. And we've just got

103
00:05:07,320 --> 00:05:09,960
Speaker 8: a great trajectory on the labor market. Now. The FED,

104
00:05:10,600 --> 00:05:14,880
Speaker 8: I believe, took a hard pause last year. They used

105
00:05:14,920 --> 00:05:18,120
Speaker 8: boilerplate language that was basically, we'll let you know when

106
00:05:18,120 --> 00:05:22,839
Speaker 8: we're going to move again. And clearly there's no consensus

107
00:05:22,880 --> 00:05:25,640
Speaker 8: on the FED to do anything but sit here, and

108
00:05:25,720 --> 00:05:28,479
Speaker 8: so that's going to make it even difficult, more difficult,

109
00:05:28,560 --> 00:05:30,360
Speaker 8: or raise the bar for them to see the kind

110
00:05:30,360 --> 00:05:33,159
Speaker 8: of data that would mean they need to cut. So

111
00:05:33,240 --> 00:05:35,560
Speaker 8: I completely agree with Claudia. They're just going to hang

112
00:05:35,600 --> 00:05:38,680
Speaker 8: out here. They're looking golden for making that decision to stop.

113
00:05:38,880 --> 00:05:40,800
Speaker 7: And do we get to the point where I've heard

114
00:05:40,839 --> 00:05:44,120
Speaker 7: some people suggest that the longer they do wait, the

115
00:05:44,200 --> 00:05:46,400
Speaker 7: odds actually go up that the next move would be

116
00:05:46,440 --> 00:05:49,480
Speaker 7: a rate hike. Are you in that camp or I

117
00:05:49,520 --> 00:05:51,400
Speaker 7: have a hard time thinking about hiking rates.

118
00:05:51,400 --> 00:05:54,800
Speaker 8: Well, there's an odd there's odds on it. I don't

119
00:05:54,800 --> 00:05:58,120
Speaker 8: know that they're very high. But you know, think about

120
00:05:58,320 --> 00:06:00,440
Speaker 8: back in the mid nineties, we had a mid cycle

121
00:06:00,520 --> 00:06:04,159
Speaker 8: growth correction and the Fed cut rates and then held

122
00:06:04,279 --> 00:06:06,960
Speaker 8: steady at that time about seventy five basis point cut

123
00:06:06,960 --> 00:06:09,320
Speaker 8: and rates we cut rates one hundred basis points this time.

124
00:06:09,800 --> 00:06:12,720
Speaker 8: Then they held steady, the economy started strengthening again, and

125
00:06:13,880 --> 00:06:18,200
Speaker 8: rates increased again at some point, right, And so I

126
00:06:18,240 --> 00:06:21,479
Speaker 8: don't know that it raises the odds, Like just pausing

127
00:06:21,480 --> 00:06:23,560
Speaker 8: for this long means we're going to get a reacceleration

128
00:06:23,600 --> 00:06:28,359
Speaker 8: in the economy. But that is that's a plausible outcome.

129
00:06:28,400 --> 00:06:30,479
Speaker 8: I would put a lower probability than the next move

130
00:06:30,560 --> 00:06:33,159
Speaker 8: being a cut. And we still have a tremendous amount

131
00:06:33,160 --> 00:06:34,479
Speaker 8: of policy uncertainty.

132
00:06:34,560 --> 00:06:38,560
Speaker 3: Right, is the unemployment rate four point one percent down

133
00:06:38,640 --> 00:06:40,960
Speaker 3: a tick to four point zero percent, I mean three

134
00:06:41,000 --> 00:06:44,480
Speaker 3: point nine is a lot lower from four than four

135
00:06:44,480 --> 00:06:45,960
Speaker 3: point one to four point zero.

136
00:06:46,320 --> 00:06:48,640
Speaker 2: Does that matter to you that you know it's going

137
00:06:48,680 --> 00:06:49,920
Speaker 2: in the way nobody expected.

138
00:06:50,080 --> 00:06:53,080
Speaker 8: Now, I think what matters is looking at the underlying

139
00:06:53,120 --> 00:06:56,200
Speaker 8: details and saying what caused the drop and the unemployment rate?

140
00:06:56,720 --> 00:06:59,680
Speaker 8: Is it lower labor force participation? People just left the

141
00:06:59,760 --> 00:07:06,400
Speaker 8: labor Is it because more people joined and were able

142
00:07:06,440 --> 00:07:07,599
Speaker 8: to find jobs?

143
00:07:07,680 --> 00:07:07,880
Speaker 3: Right?

144
00:07:07,920 --> 00:07:11,120
Speaker 6: So that comes down to that household employment.

145
00:07:10,600 --> 00:07:12,400
Speaker 5: Report and a lot of deeper data.

146
00:07:12,680 --> 00:07:14,960
Speaker 8: Yeah, a lot of deeper data. Unemployment rates one of

147
00:07:14,960 --> 00:07:17,240
Speaker 8: the hardest things to parse. It takes a lot of

148
00:07:17,240 --> 00:07:19,600
Speaker 8: time because there's a lot of undercurrents and what drives.

149
00:07:19,640 --> 00:07:21,600
Speaker 3: Okay, I want to go back to wealth effect because

150
00:07:21,600 --> 00:07:24,040
Speaker 3: this is something the American consumer, folks, is what Ellen

151
00:07:24,120 --> 00:07:27,720
Speaker 3: Zentner knows. For those of you on YouTube and across

152
00:07:27,720 --> 00:07:30,360
Speaker 3: this nation in your commute, Ellen Zenner and Morgan Stanley

153
00:07:30,360 --> 00:07:32,520
Speaker 3: with us right now, Christiana cat Many.

154
00:07:32,360 --> 00:07:33,280
Speaker 2: Scheduled to be with us.

155
00:07:33,280 --> 00:07:37,240
Speaker 3: Thrilled to Rebecca Patterson with this as well, but right

156
00:07:37,280 --> 00:07:41,960
Speaker 3: now Zentner of Thematic Macro Investing at Morgan Stanley. Okay,

157
00:07:42,000 --> 00:07:47,920
Speaker 3: just suggesting seven nights, six days, single occupancy boat package,

158
00:07:48,360 --> 00:07:53,120
Speaker 3: Belize fly fishing. You sell some shares of Nvidia and

159
00:07:53,160 --> 00:07:57,840
Speaker 3: for eight and twenty five dollars you're fishing in belize,

160
00:07:57,880 --> 00:08:00,960
Speaker 3: which I'm sure you've done. I mean, the answer here

161
00:08:01,120 --> 00:08:04,760
Speaker 3: is the wealth effect to me is enormous right now

162
00:08:04,760 --> 00:08:07,400
Speaker 3: when I look at the idiocy of some of these stock.

163
00:08:07,240 --> 00:08:09,800
Speaker 8: Books, yea, and believe you can do uh, you could

164
00:08:09,800 --> 00:08:11,840
Speaker 8: do fishing from the beach for rooster fish.

165
00:08:12,080 --> 00:08:17,440
Speaker 6: Look that up? See what that crazy looking skillet?

166
00:08:17,760 --> 00:08:22,720
Speaker 8: No, you slap them and send them back on their way.

167
00:08:23,600 --> 00:08:26,760
Speaker 8: So look, the wealth effect is, as you said.

168
00:08:26,640 --> 00:08:27,360
Speaker 6: It's really strong.

169
00:08:27,640 --> 00:08:33,680
Speaker 8: Now the the it's much stronger than it's been in

170
00:08:33,720 --> 00:08:36,800
Speaker 8: my memory of practicing as an economist to get it.

171
00:08:36,920 --> 00:08:38,880
Speaker 6: And so there are a couple of things here.

172
00:08:39,440 --> 00:08:42,880
Speaker 8: Is it so one we have created a tremendous amount

173
00:08:42,880 --> 00:08:46,439
Speaker 8: of wealth, and so one are we spending the same

174
00:08:46,520 --> 00:08:48,839
Speaker 8: amount out of that wealth that we normally do?

175
00:08:48,920 --> 00:08:49,600
Speaker 6: It's just wealth?

176
00:08:49,640 --> 00:08:53,920
Speaker 8: Is that high? That is one possibility? Or is the

177
00:08:54,080 --> 00:08:58,679
Speaker 8: still some lingering effects of COVID which taught us we're

178
00:08:58,679 --> 00:09:01,360
Speaker 8: all going to die tomorrow and so spend it?

179
00:09:01,360 --> 00:09:02,080
Speaker 6: If you got it?

180
00:09:02,200 --> 00:09:02,640
Speaker 7: Interesting?

181
00:09:02,760 --> 00:09:05,000
Speaker 6: So is it that the marginal propensit you consume.

182
00:09:05,120 --> 00:09:08,320
Speaker 8: That's a great economist term, tom You like that marginal

183
00:09:08,320 --> 00:09:11,160
Speaker 8: propension to consume out of wealth may just be higher?

184
00:09:11,920 --> 00:09:13,840
Speaker 8: And so does that fade the further we get away

185
00:09:13,840 --> 00:09:17,200
Speaker 8: from COVID further it's in the rear view mirror. Or

186
00:09:17,240 --> 00:09:19,160
Speaker 8: does it just stay that high because now we've had

187
00:09:19,160 --> 00:09:20,040
Speaker 8: some structural shift.

188
00:09:20,240 --> 00:09:22,040
Speaker 3: You've seen research on this. I mean, you're in a

189
00:09:22,120 --> 00:09:23,600
Speaker 3: casperg seat to see research.

190
00:09:24,120 --> 00:09:25,320
Speaker 6: We have done this research.

191
00:09:25,440 --> 00:09:27,400
Speaker 2: Well do you see that? To me, it's it's an

192
00:09:27,480 --> 00:09:29,280
Speaker 2: unspoken huge deal. Am I wrong?

193
00:09:29,440 --> 00:09:31,920
Speaker 6: Yeah? So what what I see, what I what I

194
00:09:31,920 --> 00:09:32,439
Speaker 6: believe I.

195
00:09:32,400 --> 00:09:35,120
Speaker 8: See in the numbers is that it's just the amount

196
00:09:35,160 --> 00:09:38,480
Speaker 8: of wealth that has been created has just been that large.

197
00:09:39,200 --> 00:09:42,319
Speaker 8: I think that, well, we're seeing we're in the midst

198
00:09:42,320 --> 00:09:44,880
Speaker 8: of seeing the data is quite lagged on this, that

199
00:09:44,880 --> 00:09:48,120
Speaker 8: that the marginal propensity you consume out of wealth is

200
00:09:48,120 --> 00:09:52,439
Speaker 8: returning back to normal, but that the wealth we've created is.

201
00:09:52,440 --> 00:09:53,000
Speaker 3: Just that high.

202
00:09:53,120 --> 00:09:54,800
Speaker 7: Yeah, it's just I mean, and it kind of goes

203
00:09:54,840 --> 00:09:57,600
Speaker 7: back to that issue in this US consumer. If this

204
00:09:57,679 --> 00:10:02,280
Speaker 7: consumer owns assets, stocks by on real estate, feeling very

205
00:10:02,320 --> 00:10:04,120
Speaker 7: good about the world. Yeah, and think about it, don't

206
00:10:04,200 --> 00:10:07,439
Speaker 7: that inflation kick has been even more pronounced.

207
00:10:07,200 --> 00:10:11,319
Speaker 8: Exactly exactly, And well, we're a service's economy. Sixty percent

208
00:10:11,320 --> 00:10:14,760
Speaker 8: of all spending as services. So you slap tariffs on goods,

209
00:10:15,160 --> 00:10:17,280
Speaker 8: and you're going to deepen that trend that good spending

210
00:10:17,280 --> 00:10:20,640
Speaker 8: has been slowing and that services spending has been taking share,

211
00:10:20,720 --> 00:10:22,800
Speaker 8: and we're going to still go out and spend on

212
00:10:23,000 --> 00:10:24,240
Speaker 8: all the services we can.

213
00:10:24,559 --> 00:10:26,679
Speaker 7: So how do you think about over there? Morgan standing

214
00:10:26,800 --> 00:10:29,680
Speaker 7: this whole terariff discussion over the last couple of months.

215
00:10:29,880 --> 00:10:33,400
Speaker 8: So I think it's it creates an extremely uncertain backdrop.

216
00:10:33,520 --> 00:10:35,280
Speaker 8: We are just starting to see a lot of the

217
00:10:35,320 --> 00:10:39,920
Speaker 8: business surveys show sentiment damage from the uncertain around tariffs.

218
00:10:39,920 --> 00:10:42,679
Speaker 8: It's awfully hard to make business decisions in this environment.

219
00:10:43,720 --> 00:10:45,319
Speaker 6: And so as this.

220
00:10:45,360 --> 00:10:48,600
Speaker 8: Volatility around tariffs, do we or don't we put them

221
00:10:48,640 --> 00:10:51,760
Speaker 8: on continues? I think even if you're not, if your

222
00:10:51,800 --> 00:10:54,240
Speaker 8: bottom line isn't hit from tarrafs, you're going to start

223
00:10:54,840 --> 00:10:57,120
Speaker 8: You're going to start building precaution.

224
00:10:57,520 --> 00:10:59,920
Speaker 3: Every time you're on I learned something. A rooster fish

225
00:11:00,120 --> 00:11:03,040
Speaker 3: is four feet lawn, sometimes one hundred pounds.

226
00:11:03,040 --> 00:11:03,840
Speaker 2: Have you caught one?

227
00:11:03,920 --> 00:11:04,079
Speaker 5: Now?

228
00:11:04,080 --> 00:11:07,240
Speaker 8: I haven't caught one hundred pounds four foot rooster fish?

229
00:11:07,280 --> 00:11:08,360
Speaker 2: Are they like barracuda?

230
00:11:08,880 --> 00:11:13,240
Speaker 8: They're just one hell of an ugly looking fish.

231
00:11:13,559 --> 00:11:14,880
Speaker 7: But you're in belieze, so who cares?

232
00:11:15,200 --> 00:11:16,839
Speaker 8: Yeah, you're in belieze.

233
00:11:17,480 --> 00:11:20,160
Speaker 2: That's the wealth effect. With Ellen Zender, thank you so much.

234
00:11:20,559 --> 00:11:24,000
Speaker 3: With Morgan Stanley, just absolutely extraordinary. I've got a little

235
00:11:24,280 --> 00:11:26,839
Speaker 3: Zenner driving the market higher. We were reading the screen

236
00:11:26,880 --> 00:11:29,240
Speaker 3: and now a little bit of green. Critically, the VIX

237
00:11:29,320 --> 00:11:33,160
Speaker 3: comes in fifteen point zero zero on the Vicks you

238
00:11:33,240 --> 00:11:35,160
Speaker 3: gotta I'll tell you a fourteen. I don't see a

239
00:11:35,200 --> 00:11:38,840
Speaker 3: fourteen yet. Maybe we're there and I missed it. Yields

240
00:11:38,880 --> 00:11:41,640
Speaker 3: higher three basis points in the ten year yield four

241
00:11:41,640 --> 00:11:44,360
Speaker 3: point four to six percent. And yes I followed the

242
00:11:44,400 --> 00:11:47,880
Speaker 3: ten year really yield fraction on two point zero two

243
00:11:47,960 --> 00:11:51,760
Speaker 3: out to two point zero four. We had some dollar

244
00:11:51,920 --> 00:11:54,640
Speaker 3: strength off of this. What a treat to go from

245
00:11:54,640 --> 00:11:58,280
Speaker 3: Claudia sam and Ellen Zenner over to the wonderful efforts

246
00:11:58,280 --> 00:12:02,880
Speaker 3: of Rebecca Patterson tying it all together and particularly with

247
00:12:03,000 --> 00:12:06,480
Speaker 3: her expertise on foreign exchange. She's a senior fellow at

248
00:12:06,520 --> 00:12:10,240
Speaker 3: the Consul on Foreign Relations and had parchment out at

249
00:12:10,280 --> 00:12:12,720
Speaker 3: Bridgewater and at Best in her trust as well.

250
00:12:12,920 --> 00:12:17,400
Speaker 2: Rebecca, good morning, the prost morning, the prosperous America.

251
00:12:17,480 --> 00:12:20,960
Speaker 3: That is the backdrop for this four point zero percent

252
00:12:21,000 --> 00:12:22,080
Speaker 3: on employment rate.

253
00:12:22,720 --> 00:12:23,840
Speaker 2: Does it continue?

254
00:12:23,880 --> 00:12:27,679
Speaker 3: Do you have a sustaining nature to our real GDP.

255
00:12:29,600 --> 00:12:32,600
Speaker 9: Well, you know, when I think about the economy, and

256
00:12:32,640 --> 00:12:35,280
Speaker 9: we know that consumption is the majority of what drives

257
00:12:35,280 --> 00:12:38,439
Speaker 9: our growth. To understand what the consumer does, you have

258
00:12:38,520 --> 00:12:40,800
Speaker 9: to think about their ability to spend. Do they have

259
00:12:40,840 --> 00:12:43,959
Speaker 9: the money and the job, which today underscored that they do,

260
00:12:44,480 --> 00:12:46,600
Speaker 9: and do they have the confidence to spend. They might

261
00:12:46,640 --> 00:12:48,319
Speaker 9: have money, but they don't want to spend it. That's

262
00:12:48,360 --> 00:12:51,040
Speaker 9: what we've seen in China. In the case of the US,

263
00:12:51,240 --> 00:12:54,520
Speaker 9: I think we do still have both confidence and ability.

264
00:12:54,960 --> 00:12:59,439
Speaker 9: The latest confidence surveys, although very bifurcated by political affiliation,

265
00:13:00,160 --> 00:13:03,800
Speaker 9: still trending higher. So for the short term at least,

266
00:13:04,000 --> 00:13:06,679
Speaker 9: I think that the consumer continues to drive this, and

267
00:13:06,720 --> 00:13:10,200
Speaker 9: that's clearly very positive for the stock market broadly speaking.

268
00:13:11,200 --> 00:13:13,600
Speaker 9: That said, what we know has driven the wealth effect

269
00:13:13,679 --> 00:13:18,360
Speaker 9: housing equities primarily. Anything that happens that really spokes the

270
00:13:18,400 --> 00:13:22,000
Speaker 9: stock market could cause this higher income consumer to pause

271
00:13:22,080 --> 00:13:24,840
Speaker 9: as well quickly, and we know there's risks to that

272
00:13:24,920 --> 00:13:29,199
Speaker 9: from possible policy announcements from the new administration or even

273
00:13:29,360 --> 00:13:31,080
Speaker 9: things like we saw in the last week or so.

274
00:13:31,160 --> 00:13:33,839
Speaker 9: A deep seek you it doesn't take much at these

275
00:13:33,920 --> 00:13:38,000
Speaker 9: valuations to cause equities to get a little bit skittish.

276
00:13:38,440 --> 00:13:41,439
Speaker 7: So, Rebecca, if you step back here and think about it,

277
00:13:42,040 --> 00:13:44,240
Speaker 7: put the jobs number in context. It's what we're seeing

278
00:13:44,240 --> 00:13:46,679
Speaker 7: from some of the policy decisions of this Trump administration.

279
00:13:46,760 --> 00:13:48,920
Speaker 7: The economy right now is in pretty good shape on

280
00:13:49,000 --> 00:13:52,440
Speaker 7: it as which to the labor market inflation. Yet to

281
00:13:52,480 --> 00:13:56,679
Speaker 7: talk about tariffs continues to be an uncertainty. And what

282
00:13:56,720 --> 00:13:58,439
Speaker 7: do you make of some of the economic policies and

283
00:13:58,520 --> 00:13:59,800
Speaker 7: rhetoric we're hearing out of Washington.

284
00:14:00,840 --> 00:14:03,240
Speaker 9: Well, there's four that I think we're all focused on

285
00:14:03,440 --> 00:14:08,960
Speaker 9: in terms of the economy and markets, and that is trade, taxes, immigration, regulation,

286
00:14:09,679 --> 00:14:11,840
Speaker 9: And at the end of the day, what happens to

287
00:14:12,040 --> 00:14:15,360
Speaker 9: these markets and to our economy will depend on the

288
00:14:15,360 --> 00:14:20,160
Speaker 9: timing of those and the magnitude. And unfortunately we don't

289
00:14:20,160 --> 00:14:21,160
Speaker 9: have a lot of clarity.

290
00:14:21,640 --> 00:14:22,120
Speaker 5: Regulation.

291
00:14:22,240 --> 00:14:24,800
Speaker 9: We probably have a little more I think that will

292
00:14:24,800 --> 00:14:28,360
Speaker 9: becoming deregulation, But the problem with it is it doesn't

293
00:14:28,400 --> 00:14:31,720
Speaker 9: happen overnight. There is a process that this administration will

294
00:14:31,720 --> 00:14:34,040
Speaker 9: have to follow and it'll take a couple of quarters

295
00:14:34,080 --> 00:14:37,520
Speaker 9: to actually be felt in the economy. On immigration, we

296
00:14:37,600 --> 00:14:40,320
Speaker 9: know the trend, but we don't know the magnitude, and

297
00:14:40,320 --> 00:14:43,600
Speaker 9: the magnitude will matter for the labor force and for wages.

298
00:14:44,800 --> 00:14:45,120
Speaker 5: Trade.

299
00:14:45,600 --> 00:14:48,080
Speaker 9: I mean again, I don't know, No one knows. My

300
00:14:48,200 --> 00:14:50,160
Speaker 9: gut is we are going to see more tariffs and

301
00:14:50,200 --> 00:14:52,080
Speaker 9: it's a matter of time. I think once we get

302
00:14:52,120 --> 00:14:55,800
Speaker 9: those April reports back to the President's desk, that'll give

303
00:14:55,880 --> 00:14:56,760
Speaker 9: him the green light.

304
00:14:56,600 --> 00:14:58,280
Speaker 5: To take his next step on tariffs.

305
00:14:58,600 --> 00:15:01,760
Speaker 9: And I would expect we will see tariffs on Europe

306
00:15:02,600 --> 00:15:03,840
Speaker 9: and very likely some.

307
00:15:03,760 --> 00:15:09,320
Speaker 5: More on China, Canada, Mexico. We'll see Tea live.

308
00:15:09,640 --> 00:15:13,720
Speaker 3: The Bloomberg Terminal Folks has great analysis leading the charge

309
00:15:13,760 --> 00:15:17,760
Speaker 3: today end Ocurr and Chris Ansey as well in IRA

310
00:15:17,920 --> 00:15:21,680
Speaker 3: Jersey helping out on the unemployment report. Rebecca, here's the

311
00:15:21,720 --> 00:15:25,320
Speaker 3: first line this from end Ocurr in our Global Economy Reporter.

312
00:15:26,120 --> 00:15:30,600
Speaker 3: The annual revisions now showed job growth averaged one hundred

313
00:15:30,640 --> 00:15:33,640
Speaker 3: and sixty six thousand a month. That would be a

314
00:15:33,680 --> 00:15:36,640
Speaker 3: slowdown from an initially report at one hundred and eighty

315
00:15:36,720 --> 00:15:41,240
Speaker 3: six thousand pace. To me, that's pretty much quiescent. I mean,

316
00:15:41,320 --> 00:15:44,560
Speaker 3: they're down, but they weren't the gloom that many people

317
00:15:44,560 --> 00:15:45,200
Speaker 3: were modeling.

318
00:15:46,160 --> 00:15:49,200
Speaker 9: Yeah, I would guess the federal Reserve today is very

319
00:15:49,240 --> 00:15:52,120
Speaker 9: happy and we're seeing a moderation in the pace of

320
00:15:52,200 --> 00:15:56,360
Speaker 9: job growth, but very very resilient labor market data showing

321
00:15:56,440 --> 00:15:58,880
Speaker 9: us that this economy can continue to grow at above

322
00:15:59,000 --> 00:16:02,520
Speaker 9: its potential long term rate. So maybe no rate cuts

323
00:16:02,560 --> 00:16:06,200
Speaker 9: forthcoming in the near term. That's already priced in that

324
00:16:06,280 --> 00:16:08,680
Speaker 9: we don't get a rate cut probably till midyear. But

325
00:16:08,760 --> 00:16:12,480
Speaker 9: at the same time, the normalization of the labor market

326
00:16:12,560 --> 00:16:14,640
Speaker 9: also means they don't need to be too worried at

327
00:16:14,680 --> 00:16:17,240
Speaker 9: this moment about having to go the other way in titan.

328
00:16:17,480 --> 00:16:18,960
Speaker 2: I mean, we're going to have Anna wan on with

329
00:16:19,000 --> 00:16:20,680
Speaker 2: this later. She'll be expert in that, Paul.

330
00:16:20,760 --> 00:16:25,800
Speaker 3: But basically the revision was what Mike McKee talked about was, Yeah,

331
00:16:25,840 --> 00:16:27,280
Speaker 3: it's a revision, but get over it.

332
00:16:27,280 --> 00:16:28,400
Speaker 2: It's just that a revision.

333
00:16:29,080 --> 00:16:31,000
Speaker 5: Yes, agreed, we have them every year.

334
00:16:31,680 --> 00:16:32,960
Speaker 2: Soa.

335
00:16:33,120 --> 00:16:35,320
Speaker 7: We heard from the Secretary of the Treasury, Thank you

336
00:16:35,360 --> 00:16:37,640
Speaker 7: very much, Rebecca. We heard from the Secretary and Treasury

337
00:16:38,160 --> 00:16:41,240
Speaker 7: in an interview saying love to talk down the ten

338
00:16:41,600 --> 00:16:45,040
Speaker 7: year yields. I know you have some thoughts on this.

339
00:16:45,600 --> 00:16:48,160
Speaker 7: How do you think the administration thinks about interest rates?

340
00:16:48,560 --> 00:16:52,720
Speaker 9: Yeah, it was really striking to me. That Treasury Secretary

341
00:16:52,760 --> 00:16:56,600
Speaker 9: best highlighted that they're focused on not letting the ten

342
00:16:56,680 --> 00:16:59,280
Speaker 9: year yield rise too much. I don't remember in my

343
00:16:59,400 --> 00:17:03,240
Speaker 9: career focus on the ten year yield via Treasury Secretary.

344
00:17:03,640 --> 00:17:05,360
Speaker 5: Given the size of our debt, the.

345
00:17:05,400 --> 00:17:08,359
Speaker 9: Increase in our borrowing costs, the interest we have to

346
00:17:08,400 --> 00:17:10,200
Speaker 9: pay on our debt, it makes sense.

347
00:17:10,640 --> 00:17:12,680
Speaker 5: But then how does he do it right?

348
00:17:12,960 --> 00:17:16,399
Speaker 9: If you can't the treasury market is twenty seven trillion dollars,

349
00:17:16,480 --> 00:17:19,080
Speaker 9: It's not that easy to manipulate. And when I think,

350
00:17:19,119 --> 00:17:22,280
Speaker 9: what can he do If they can limit the unfunded

351
00:17:22,520 --> 00:17:25,520
Speaker 9: increase in our deficit so you get lots of pay

352
00:17:25,560 --> 00:17:27,960
Speaker 9: for us and maybe it doesn't go up as much

353
00:17:28,000 --> 00:17:31,000
Speaker 9: as some of the estimates, that would probably provide some

354
00:17:31,080 --> 00:17:32,960
Speaker 9: relief that we're not going to have to increase bond

355
00:17:33,000 --> 00:17:37,399
Speaker 9: supply a huge amount. He could try, and this is

356
00:17:37,400 --> 00:17:39,200
Speaker 9: something to keep an eye on and we should talk

357
00:17:39,200 --> 00:17:42,800
Speaker 9: more about it in a future date. Stable Coins stable

358
00:17:42,840 --> 00:17:45,960
Speaker 9: coins right now on a decent amount of short term

359
00:17:46,000 --> 00:17:49,560
Speaker 9: treasury securities as their reserves to keep their peg to

360
00:17:49,640 --> 00:17:54,960
Speaker 9: the dollar. And this administration is very focused on increasing

361
00:17:54,960 --> 00:17:57,280
Speaker 9: the use of stable coins around the world, in part

362
00:17:57,320 --> 00:17:58,960
Speaker 9: because they know that's going to be a good source

363
00:17:58,960 --> 00:18:00,960
Speaker 9: of treasury demand. We're on the front end of the

364
00:18:00,960 --> 00:18:04,200
Speaker 9: long end, but still, you know, I think he can

365
00:18:04,240 --> 00:18:07,919
Speaker 9: also look at treasury issuance and even though he posed

366
00:18:07,960 --> 00:18:10,520
Speaker 9: yelling for this, he could issue more debt as needed

367
00:18:10,720 --> 00:18:14,480
Speaker 9: shorter maturity than longer maturity. So he has a few tools.

368
00:18:14,240 --> 00:18:17,600
Speaker 9: It's interesting to see which levers he pulls in the

369
00:18:17,640 --> 00:18:19,960
Speaker 9: coming months and quarters to do this. But if we

370
00:18:20,000 --> 00:18:23,360
Speaker 9: have strong growth like we had today, that's a benign

371
00:18:23,440 --> 00:18:25,360
Speaker 9: reason for the yield to go up, but it will

372
00:18:25,400 --> 00:18:25,760
Speaker 9: go up.

373
00:18:26,000 --> 00:18:28,280
Speaker 3: It's tacking of me, Rebecca, to get out to March

374
00:18:28,359 --> 00:18:31,560
Speaker 3: seven and the next unemployment rate. That's when your beach

375
00:18:31,600 --> 00:18:35,720
Speaker 3: season clicks in. Right, we're getting close to forty fifty, Rebecca.

376
00:18:36,160 --> 00:18:38,520
Speaker 3: I look at March seven, and you mentioned the fiscal

377
00:18:38,560 --> 00:18:42,120
Speaker 3: structure and pegging the tenure yield. I mean we rolled

378
00:18:42,160 --> 00:18:46,200
Speaker 3: into March. Is it correct to say with the nearest

379
00:18:46,280 --> 00:18:48,000
Speaker 3: fiscal crisis.

380
00:18:49,240 --> 00:18:51,639
Speaker 9: That we owe you mean with the debt ceiling or

381
00:18:51,720 --> 00:18:52,720
Speaker 9: just the size of the days?

382
00:18:52,800 --> 00:18:56,200
Speaker 2: Yeah, just as general for our listeners and YouTube viewers.

383
00:18:56,240 --> 00:18:58,919
Speaker 3: The bottom line is we get out thirty days and

384
00:18:58,960 --> 00:19:00,000
Speaker 3: it's a whole new world.

385
00:19:00,040 --> 00:19:02,440
Speaker 2: After all, A fiscal stress.

386
00:19:03,280 --> 00:19:03,600
Speaker 5: Yeah.

387
00:19:03,680 --> 00:19:08,080
Speaker 9: I mean we are facing some major debt related fiscal

388
00:19:08,160 --> 00:19:10,399
Speaker 9: challenges this year. We're going to have to see an

389
00:19:10,480 --> 00:19:13,640
Speaker 9: increase or an abolition of the debt ceiling that's being

390
00:19:13,680 --> 00:19:16,040
Speaker 9: discussed in Congress. I think we will get through that.

391
00:19:16,200 --> 00:19:19,040
Speaker 9: I'm not sure which path they'll take, but I don't

392
00:19:19,080 --> 00:19:20,560
Speaker 9: think we're going to have a crisis this time with

393
00:19:20,640 --> 00:19:24,879
Speaker 9: the Republican controlled Congress. What's more important to me is

394
00:19:25,240 --> 00:19:28,560
Speaker 9: how the reconciliation goes for the budget that they're going

395
00:19:28,600 --> 00:19:29,600
Speaker 9: to try to pass this year.

396
00:19:29,640 --> 00:19:30,800
Speaker 5: They have to pass this year.

397
00:19:31,680 --> 00:19:34,120
Speaker 9: What kind of shenanigans are used to make the math

398
00:19:34,160 --> 00:19:37,320
Speaker 9: look better? Both parties do this, so I'm not pointing

399
00:19:37,320 --> 00:19:39,879
Speaker 9: a finger, but there are going to be some shenanigans.

400
00:19:39,960 --> 00:19:41,720
Speaker 5: And then how much is that increase?

401
00:19:42,359 --> 00:19:44,280
Speaker 9: And what is the market going to tolerate If we're

402
00:19:44,280 --> 00:19:48,440
Speaker 9: putting tariffs on our biggest buyers from overseas of treasuries,

403
00:19:48,560 --> 00:19:50,359
Speaker 9: are they going to be looking more towards gold and

404
00:19:50,359 --> 00:19:52,679
Speaker 9: we're going to keep seeing new all time hyes for gold.

405
00:19:52,920 --> 00:19:56,560
Speaker 3: There I'm not going to get a gold call from

406
00:19:56,680 --> 00:20:00,520
Speaker 3: Christina KATMANI Rebecca Patterson, can you print through three thousand

407
00:20:00,600 --> 00:20:01,360
Speaker 3: gold for US?

408
00:20:02,320 --> 00:20:03,360
Speaker 5: I wouldn't rule it out.

409
00:20:05,160 --> 00:20:08,000
Speaker 9: I learned when I left the cell side you don't

410
00:20:08,040 --> 00:20:11,080
Speaker 9: have to give numbers and dates anymore. That is the

411
00:20:11,119 --> 00:20:13,800
Speaker 9: hardest part of a cell side analyst. Since I don't

412
00:20:13,840 --> 00:20:16,199
Speaker 9: have to, I'm not going to Tom, but good try with.

413
00:20:16,320 --> 00:20:18,840
Speaker 2: A cell side firm. The Console of Foreign Relations.

414
00:20:18,880 --> 00:20:22,000
Speaker 3: Rebecca Patterson, thank you so much, and now we turn

415
00:20:22,080 --> 00:20:24,119
Speaker 3: for this is just a kids say this commercial for

416
00:20:24,280 --> 00:20:27,040
Speaker 3: this is just brilliant intellectual.

417
00:20:26,560 --> 00:20:28,600
Speaker 2: Content on YouTube on radio.

418
00:20:28,600 --> 00:20:33,600
Speaker 3: And we finished strong, strong, strong with Invesco Senior portfolio manager.

419
00:20:33,600 --> 00:20:37,040
Speaker 3: That doesn't even describe our abilities Christina Kamani as well.

420
00:20:37,080 --> 00:20:40,160
Speaker 2: When you make a prediction, do you avoid level and

421
00:20:40,200 --> 00:20:42,840
Speaker 2: the time frame? Is that something you've learned to do?

422
00:20:43,400 --> 00:20:46,360
Speaker 10: You can only choose so many time, level, direction, hard

423
00:20:46,359 --> 00:20:47,640
Speaker 10: to get all three right at the same time.

424
00:20:47,920 --> 00:20:50,240
Speaker 2: Help me here with the yield? Now, is it normal?

425
00:20:50,520 --> 00:20:52,160
Speaker 2: That's some question Sweeny would ask.

426
00:20:52,960 --> 00:20:53,560
Speaker 5: Is it normal?

427
00:20:53,760 --> 00:20:56,840
Speaker 6: Is it normal like the here or what?

428
00:20:56,880 --> 00:21:00,159
Speaker 3: Oh? We had this four year window of negati of

429
00:21:00,240 --> 00:21:02,800
Speaker 3: yields and wicked low rates and now we're back here

430
00:21:02,840 --> 00:21:05,280
Speaker 3: and we better get used to it after this job's report.

431
00:21:05,600 --> 00:21:08,240
Speaker 2: Should we get used to where yields are? Right? Now? Look?

432
00:21:08,280 --> 00:21:12,640
Speaker 10: I think we've kind of been in this consistent thesis

433
00:21:12,640 --> 00:21:14,760
Speaker 10: for the last couple of months that four twenty five,

434
00:21:14,840 --> 00:21:18,240
Speaker 10: four to seventy five are probably reasonable bounds for the tenure.

435
00:21:18,359 --> 00:21:19,719
Speaker 10: And I think there's going to be a lot of

436
00:21:19,760 --> 00:21:23,280
Speaker 10: noise within there, and we sit and say, our only

437
00:21:23,320 --> 00:21:26,720
Speaker 10: certainty here is uncertainty. We have all of this this

438
00:21:26,920 --> 00:21:30,399
Speaker 10: information flow coming from DC. What are the priorities of

439
00:21:30,400 --> 00:21:33,760
Speaker 10: the administration? How do we get them? What's the order,

440
00:21:33,800 --> 00:21:35,800
Speaker 10: what's the magnitude? And I think that's going to cause

441
00:21:35,840 --> 00:21:37,720
Speaker 10: noise out the back end, and where there's a lot

442
00:21:37,720 --> 00:21:39,520
Speaker 10: more stability is in the front end, because I think

443
00:21:39,520 --> 00:21:42,280
Speaker 10: the FED is very comfortably on hold as they wait

444
00:21:42,320 --> 00:21:44,600
Speaker 10: for kind of more clarity on what the path is

445
00:21:44,640 --> 00:21:45,840
Speaker 10: for real econ data.

446
00:21:45,920 --> 00:21:48,000
Speaker 7: All right, So then it becomes like we answer kind

447
00:21:48,000 --> 00:21:50,000
Speaker 7: of the duration question a little bit. How about the

448
00:21:50,040 --> 00:21:53,159
Speaker 7: credit quality question, because again, somebody can sit there at

449
00:21:53,160 --> 00:21:55,040
Speaker 7: a two year treasury at four and a quarter percent,

450
00:21:55,520 --> 00:21:56,520
Speaker 7: that's not a bad living.

451
00:21:57,800 --> 00:21:58,280
Speaker 2: Do I do that?

452
00:21:58,400 --> 00:21:59,800
Speaker 7: Or do I take some credit risk? Do I go

453
00:22:00,240 --> 00:22:01,359
Speaker 7: high yield leverage loans?

454
00:22:01,359 --> 00:22:01,800
Speaker 5: How do you guys?

455
00:22:02,000 --> 00:22:05,000
Speaker 10: Yeah, So when we think about that, I think we're

456
00:22:05,040 --> 00:22:07,480
Speaker 10: really happy to say we think that the front end

457
00:22:07,880 --> 00:22:11,439
Speaker 10: is a great anchor in the market and you no

458
00:22:11,520 --> 00:22:14,199
Speaker 10: longer have negative carry to where policy rates are, and

459
00:22:14,200 --> 00:22:17,199
Speaker 10: then you can build interesting portfolios around front end assets.

460
00:22:17,240 --> 00:22:19,120
Speaker 10: And that's where we're willing to take some credit risk

461
00:22:19,160 --> 00:22:22,000
Speaker 10: and look at mortgages that inherently have some selling fall

462
00:22:22,080 --> 00:22:26,840
Speaker 10: component to them. So credit as a whole, i'd say, again,

463
00:22:26,920 --> 00:22:29,359
Speaker 10: like we have our credit specialists within Invesco, but the

464
00:22:29,359 --> 00:22:32,720
Speaker 10: way we're looking at it, certainly short duration double b's

465
00:22:32,720 --> 00:22:35,439
Speaker 10: look really interesting. There's mortgages, there's mortgages in Europe and

466
00:22:35,440 --> 00:22:36,640
Speaker 10: the UK that look interesting.

467
00:22:37,320 --> 00:22:40,560
Speaker 2: Where are you un duration? I mean to me, it's

468
00:22:40,600 --> 00:22:42,800
Speaker 2: just absolutely fascinating. We mentioned earlier.

469
00:22:42,920 --> 00:22:45,600
Speaker 3: Should John Tucker get the two year CD or the

470
00:22:45,640 --> 00:22:48,640
Speaker 3: five year CD? That's a really important question right now,

471
00:22:48,680 --> 00:22:49,320
Speaker 3: isn't it.

472
00:22:49,320 --> 00:22:51,680
Speaker 10: It is absolutely And you take a step back and

473
00:22:52,040 --> 00:22:54,280
Speaker 10: we live back in a world of babs, right, bonds

474
00:22:54,280 --> 00:22:58,360
Speaker 10: are back and that's there is definitely value there. However,

475
00:22:58,600 --> 00:23:01,040
Speaker 10: you look in the last year, were the best performing

476
00:23:01,080 --> 00:23:02,160
Speaker 10: asset out there?

477
00:23:02,240 --> 00:23:02,480
Speaker 5: Right?

478
00:23:02,840 --> 00:23:08,360
Speaker 10: Because you've had this negative an inverted yield curve and whatnot.

479
00:23:08,440 --> 00:23:11,280
Speaker 10: So when we think about duration and where we want

480
00:23:11,280 --> 00:23:14,879
Speaker 10: to be in the curve, I think there needs to

481
00:23:14,880 --> 00:23:17,800
Speaker 10: be more turn premium built in a bit for depending

482
00:23:17,800 --> 00:23:20,040
Speaker 10: on what we get fiscal wise, And it's really around

483
00:23:20,080 --> 00:23:21,479
Speaker 10: the front ends that there is value.

484
00:23:22,560 --> 00:23:24,760
Speaker 7: So again, if I'm in the FED a reserve, I

485
00:23:24,760 --> 00:23:26,800
Speaker 7: look at today's data, I think I have a little

486
00:23:26,840 --> 00:23:29,000
Speaker 7: bit more conviction, like I don't have to do anything.

487
00:23:29,440 --> 00:23:31,440
Speaker 7: I mean, how long do I just take a few

488
00:23:31,440 --> 00:23:32,760
Speaker 7: months off here or what do I do?

489
00:23:33,000 --> 00:23:35,880
Speaker 10: Our base case, I think is that the FED can

490
00:23:35,880 --> 00:23:42,280
Speaker 10: comfortably or right. One data point doesn't change the FED thesis. Two,

491
00:23:42,359 --> 00:23:44,240
Speaker 10: maybe they start to get worried in one direction or

492
00:23:44,280 --> 00:23:46,280
Speaker 10: the next. And three is really when they can start

493
00:23:46,320 --> 00:23:48,119
Speaker 10: to react. And if you think of we have a

494
00:23:48,119 --> 00:23:50,880
Speaker 10: new administration, we have a massive amount of different policies

495
00:23:50,920 --> 00:23:53,359
Speaker 10: coming down the pike. Even if you go through the

496
00:23:53,359 --> 00:23:56,520
Speaker 10: list tariffs, will it have a bigger negative growth, negative

497
00:23:56,560 --> 00:23:58,800
Speaker 10: confidence impact or will it be an inflation impact?

498
00:23:58,880 --> 00:24:00,359
Speaker 5: Is it a right?

499
00:24:00,400 --> 00:24:01,359
Speaker 10: Which one of these things?

500
00:24:01,400 --> 00:24:03,720
Speaker 5: Is it going to be? So I think that that.

501
00:24:03,400 --> 00:24:07,600
Speaker 10: That tells you the FED says we need right a

502
00:24:07,680 --> 00:24:09,200
Speaker 10: series of data to have comfort.

503
00:24:09,320 --> 00:24:11,960
Speaker 3: But to that wonderful summer you just gave, do you

504
00:24:12,119 --> 00:24:16,040
Speaker 3: then pull in your maturity your duration? Yeah?

505
00:24:16,040 --> 00:24:18,480
Speaker 6: I think you do by two weeks.

506
00:24:19,520 --> 00:24:23,560
Speaker 10: Look, we're kind of again you can tactically be playing

507
00:24:23,640 --> 00:24:27,000
Speaker 10: duration out the curve. I think we're getting Will we

508
00:24:27,040 --> 00:24:30,159
Speaker 10: probably test five percent tens again or at some point

509
00:24:30,359 --> 00:24:30,800
Speaker 10: this year?

510
00:24:31,040 --> 00:24:31,320
Speaker 2: Sure?

511
00:24:31,480 --> 00:24:32,320
Speaker 6: Are we there yet?

512
00:24:32,359 --> 00:24:33,640
Speaker 5: Do we need to be massively short?

513
00:24:33,680 --> 00:24:33,760
Speaker 9: No?

514
00:24:33,800 --> 00:24:34,320
Speaker 5: I don't think so.

515
00:24:34,359 --> 00:24:36,720
Speaker 10: I think you can tactically play out the curve where

516
00:24:36,760 --> 00:24:39,160
Speaker 10: you want to own and there's value is two's and

517
00:24:39,160 --> 00:24:42,120
Speaker 10: fives and kind of anchoring some assets there.

518
00:24:42,840 --> 00:24:45,200
Speaker 3: What's the excitement out there right now into the spring

519
00:24:45,240 --> 00:24:46,080
Speaker 3: of this year in bonds?

520
00:24:46,119 --> 00:24:47,840
Speaker 2: Is there a lot of new issuance? Are you getting

521
00:24:47,840 --> 00:24:48,919
Speaker 2: called up all the time?

522
00:24:49,320 --> 00:24:52,080
Speaker 5: There is definitely is sending you on junket stable.

523
00:24:53,119 --> 00:24:56,640
Speaker 10: There's definitely a lot of issuance coming down the pike.

524
00:24:56,720 --> 00:24:59,440
Speaker 10: And I think again, as the US market and the

525
00:24:59,520 --> 00:25:01,600
Speaker 10: kind of that dominance in the world, there will there's

526
00:25:01,640 --> 00:25:04,040
Speaker 10: always money that's going into there. I think when we

527
00:25:04,040 --> 00:25:05,879
Speaker 10: look across the markets that we look at, which are

528
00:25:06,040 --> 00:25:08,760
Speaker 10: rates and em and credit, what's interesting to us is

529
00:25:08,800 --> 00:25:11,240
Speaker 10: really FX from here, like there's a lot of potentials.

530
00:25:11,320 --> 00:25:14,840
Speaker 10: Yen can be a real mover from here. You have

531
00:25:14,960 --> 00:25:18,359
Speaker 10: a lot of commentary from the administration about a strong dollar,

532
00:25:18,440 --> 00:25:21,400
Speaker 10: but does that really play out for a strong dollar

533
00:25:21,480 --> 00:25:23,959
Speaker 10: or do we have some like weaker dollar tendencies kind

534
00:25:24,000 --> 00:25:24,960
Speaker 10: of in the next six months.

535
00:25:25,280 --> 00:25:28,000
Speaker 7: Mergery markets tell us where you see opportunity or is

536
00:25:28,160 --> 00:25:29,200
Speaker 7: everything tied to China.

537
00:25:29,240 --> 00:25:30,119
Speaker 11: I don't know how to look at it.

538
00:25:30,600 --> 00:25:34,680
Speaker 10: I think it's really idiosyncratic from here. So I think

539
00:25:34,680 --> 00:25:38,879
Speaker 10: if you talk to em specialists, they will. But I

540
00:25:38,880 --> 00:25:42,240
Speaker 10: think like some of the focuses are these like Egypt

541
00:25:42,240 --> 00:25:45,880
Speaker 10: people are excited about, and Turkey, and there's like Argentina

542
00:25:46,080 --> 00:25:48,520
Speaker 10: is a great story, right like there are these, but

543
00:25:48,600 --> 00:25:52,000
Speaker 10: like Argentina is a hard asset story, or right like

544
00:25:52,040 --> 00:25:57,440
Speaker 10: they're where people are concerned. Are China terrorists? Mexico there's

545
00:25:57,440 --> 00:26:00,679
Speaker 10: so much noise. Brazil has its own idios and growth

546
00:26:00,720 --> 00:26:03,399
Speaker 10: and politics and what's going on there. So it's really

547
00:26:03,440 --> 00:26:05,440
Speaker 10: I don't think you can say latantly.

548
00:26:06,760 --> 00:26:10,120
Speaker 2: Do your work. Yeah. A woman of Villanova.

549
00:26:10,160 --> 00:26:13,560
Speaker 6: Eagles, Oh, I don't know.

550
00:26:13,600 --> 00:26:14,159
Speaker 5: I'm gonna go.

551
00:26:14,280 --> 00:26:16,400
Speaker 10: I grew up outside of Boston. My husband would tell

552
00:26:16,400 --> 00:26:17,840
Speaker 10: me that I'm supposed to be a Giants fan, but

553
00:26:17,840 --> 00:26:19,040
Speaker 10: I'm gonna go Taylor Swift fan.

554
00:26:19,359 --> 00:26:21,600
Speaker 5: So cheerous the.

555
00:26:21,640 --> 00:26:27,280
Speaker 3: Last Power, Okay, the Power, Well, Christina's how they get

556
00:26:27,320 --> 00:26:30,520
Speaker 3: to one hundred and fifty.

557
00:26:31,000 --> 00:26:31,320
Speaker 2: Thank you.

558
00:26:31,520 --> 00:26:34,600
Speaker 3: Just always brilliant to have Claudia Simon, ellen Zett or

559
00:26:34,640 --> 00:26:39,440
Speaker 3: Rebecca Patterson so Christina. Just incredible set of academics there

560
00:26:39,680 --> 00:26:41,160
Speaker 3: to get you through this job day.

561
00:26:47,240 --> 00:26:50,800
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live

562
00:26:50,880 --> 00:26:52,960
Speaker 1: weekday afternoons from seven to ten a m.

563
00:26:53,000 --> 00:26:53,400
Speaker 5: Eastern.

564
00:26:53,600 --> 00:26:57,520
Speaker 1: Listen on Applecarplay and Android Otto with the Bloomberg Business app,

565
00:26:57,720 --> 00:26:59,400
Speaker 1: or watch us Live on YouTube.

566
00:27:00,080 --> 00:27:03,080
Speaker 3: I did a great job on this in technology yesterday,

567
00:27:03,119 --> 00:27:06,560
Speaker 3: and I got to rip up the script forget about Amazon.

568
00:27:06,760 --> 00:27:09,800
Speaker 2: I got to go to the headline tech giant. Work

569
00:27:09,920 --> 00:27:11,440
Speaker 2: Day lays off.

570
00:27:11,400 --> 00:27:15,960
Speaker 3: One thousand, seven hundred and fifty employees and shift AI.

571
00:27:16,480 --> 00:27:20,360
Speaker 2: Is this Paul Sweeney and Tom Keen and jam Tucker's future?

572
00:27:21,840 --> 00:27:24,680
Speaker 12: No, no, no, not at all. I know Workday has

573
00:27:24,760 --> 00:27:26,480
Speaker 12: laid off some people, but I don't think it has

574
00:27:26,520 --> 00:27:29,600
Speaker 12: to do with AI. The Really what happening is when

575
00:27:29,600 --> 00:27:32,840
Speaker 12: you look at most companies, the headcount growth on the

576
00:27:32,880 --> 00:27:35,440
Speaker 12: white collared area is not as much. So what's happening

577
00:27:35,520 --> 00:27:38,520
Speaker 12: is for Workday, the seat count growth is not getting there.

578
00:27:38,840 --> 00:27:40,920
Speaker 12: But that doesn't mean that they are now growing. They're

579
00:27:40,920 --> 00:27:44,520
Speaker 12: still going to grow subscription sales north of fifteen percent.

580
00:27:44,600 --> 00:27:47,000
Speaker 12: So one of the things the company did last year

581
00:27:47,160 --> 00:27:49,840
Speaker 12: was change their focus to talk about you know, seventeen

582
00:27:49,920 --> 00:27:52,159
Speaker 12: eighteen percent growth right on the top line to around

583
00:27:52,160 --> 00:27:54,919
Speaker 12: fifteen percent with a lot of margin expansion. So what

584
00:27:54,960 --> 00:27:57,880
Speaker 12: you're seeing right now is, you know, basically they are

585
00:27:57,960 --> 00:28:00,200
Speaker 12: giving margin back to the to the invent.

586
00:28:01,160 --> 00:28:04,200
Speaker 7: So Amazon last night an a rock. Its kind of

587
00:28:04,240 --> 00:28:08,200
Speaker 7: sounds a little bit similar to Microsoft saying that they

588
00:28:08,240 --> 00:28:11,640
Speaker 7: can't keep up with a demand for their AI products.

589
00:28:11,640 --> 00:28:14,240
Speaker 7: Can you explain what we're seeing in the industry, what

590
00:28:14,760 --> 00:28:15,600
Speaker 7: are the constraints?

591
00:28:16,920 --> 00:28:19,760
Speaker 12: This is really you know, a rush towards doing land

592
00:28:19,760 --> 00:28:23,200
Speaker 12: crab right now. You've got to have the infrastructure ready

593
00:28:23,280 --> 00:28:25,960
Speaker 12: when clients want to deploy more of the products. So

594
00:28:26,000 --> 00:28:28,640
Speaker 12: one of the things that you will see is companies

595
00:28:28,680 --> 00:28:30,800
Speaker 12: are experimenting with AI. So they are starting with a

596
00:28:30,840 --> 00:28:33,480
Speaker 12: small project, then they are expanding it, but they need

597
00:28:33,520 --> 00:28:36,240
Speaker 12: an infrastructure around it. This is something that we have

598
00:28:36,320 --> 00:28:38,960
Speaker 12: been saying for several years that the best way to

599
00:28:38,960 --> 00:28:42,000
Speaker 12: do that is on a cloud infrastructure rather than doing

600
00:28:42,000 --> 00:28:45,360
Speaker 12: it in house, because first of all, it's scalable, it's cheaper,

601
00:28:45,640 --> 00:28:48,440
Speaker 12: and more importantly, the cost for you is variable. You're

602
00:28:48,480 --> 00:28:50,360
Speaker 12: not going to be able to, you know, come up

603
00:28:50,400 --> 00:28:53,120
Speaker 12: with buying those AI service and GPUs in house yourself.

604
00:28:53,320 --> 00:28:55,239
Speaker 12: You just go and rent it out. So that's what

605
00:28:55,320 --> 00:28:58,120
Speaker 12: everybody is doing right now, ensuring that they don't left

606
00:28:58,200 --> 00:29:00,880
Speaker 12: they don't get left behind when you see a surge

607
00:29:00,880 --> 00:29:01,800
Speaker 12: of demand coming in.

608
00:29:02,600 --> 00:29:04,920
Speaker 7: So how do you stack up kind of the competitive

609
00:29:05,000 --> 00:29:07,600
Speaker 7: landscape for AI am thinking of the big players Amazon,

610
00:29:08,360 --> 00:29:11,360
Speaker 7: you know, Microsoft or Google. How is it shaping up here?

611
00:29:12,200 --> 00:29:15,280
Speaker 12: Yeah, let's talk about the fold companies. For sure, Microsoft

612
00:29:15,360 --> 00:29:17,760
Speaker 12: absolutely in the lead, but that is because of the chat,

613
00:29:17,840 --> 00:29:20,960
Speaker 12: GPT and open AI relationship. Bulk of the revenue that

614
00:29:21,000 --> 00:29:23,960
Speaker 12: they are generating is from consumer apps. For the other

615
00:29:24,000 --> 00:29:27,239
Speaker 12: three companies, which is Google, Amazon, and even Meta, they

616
00:29:27,280 --> 00:29:29,800
Speaker 12: don't have consumers app that they can monetize that way.

617
00:29:30,520 --> 00:29:33,400
Speaker 12: Meta actually doesn't even have a cloud business, so we

618
00:29:33,440 --> 00:29:35,760
Speaker 12: don't know how they can monetize it. So let's look

619
00:29:35,800 --> 00:29:39,040
Speaker 12: at Google and Amazon. Bulk of their AI revenues come

620
00:29:39,080 --> 00:29:42,720
Speaker 12: going to come from enterprises, and enterprises are slow in

621
00:29:42,800 --> 00:29:45,440
Speaker 12: embracing it, and even if they have paid an application,

622
00:29:45,880 --> 00:29:49,040
Speaker 12: the contribution to the bottom line of cloud is very

623
00:29:49,080 --> 00:29:52,360
Speaker 12: small compared to a consumer app. So all three are

624
00:29:52,360 --> 00:29:56,040
Speaker 12: working with enterprises. Microsoft has the luxury of getting all

625
00:29:56,080 --> 00:29:59,520
Speaker 12: the you know tokens when you are searching on JACKGBT,

626
00:29:59,640 --> 00:30:00,200
Speaker 12: on your foe.

627
00:30:00,040 --> 00:30:03,520
Speaker 3: On this job stay commercial free within this half hour,

628
00:30:03,520 --> 00:30:06,280
Speaker 3: will do the same at eight thirty as well. Michael

629
00:30:06,320 --> 00:30:08,560
Speaker 3: McKee scheduled to be with us on the confusion of

630
00:30:08,560 --> 00:30:11,640
Speaker 3: the revisions. Michael Barrow will darken the door, and also

631
00:30:12,320 --> 00:30:16,200
Speaker 3: a bit of the Secretary of Treasury conversation from yesterday.

632
00:30:16,280 --> 00:30:18,760
Speaker 3: Right now, we do better with the aniog rana of

633
00:30:18,800 --> 00:30:22,080
Speaker 3: Bloomberg Intelligence anerog If you need to do a log

634
00:30:22,160 --> 00:30:28,320
Speaker 3: linear extrapolation of the aniog rana world down the income statement,

635
00:30:28,480 --> 00:30:33,400
Speaker 3: which line correlates most with your future guess of what

636
00:30:33,480 --> 00:30:38,040
Speaker 3: these AI giants will do? Is it operating income, is ITITA?

637
00:30:38,560 --> 00:30:41,760
Speaker 3: Is it free cash flow? Or is it just simply revenues.

638
00:30:43,000 --> 00:30:45,120
Speaker 12: Yeah, so this twenty twenty five is going to be

639
00:30:45,120 --> 00:30:48,640
Speaker 12: a year off capital expenditure and margin compression. When you

640
00:30:48,680 --> 00:30:51,880
Speaker 12: look at somebody like an AWS, for example, they improve

641
00:30:51,960 --> 00:30:56,120
Speaker 12: their margins in twenty twenty four by ten percentage points.

642
00:30:56,200 --> 00:30:59,760
Speaker 12: So in twenty three the operating margin was twenty seven

643
00:30:59,760 --> 00:31:02,680
Speaker 12: pers and in twenty four it was thirty seven percent.

644
00:31:02,720 --> 00:31:06,400
Speaker 12: That's a big jump for AWS and now next year

645
00:31:06,480 --> 00:31:08,560
Speaker 12: we think it's going to compress at least by one

646
00:31:08,600 --> 00:31:11,480
Speaker 12: hundred to two hundred basis points, if not more because

647
00:31:11,480 --> 00:31:14,160
Speaker 12: of the investments. Longer term, this is one of the

648
00:31:14,160 --> 00:31:17,160
Speaker 12: most amazing business models of all times. You can see

649
00:31:17,200 --> 00:31:19,880
Speaker 12: margins north of forty percent, but for at least for

650
00:31:19,960 --> 00:31:22,320
Speaker 12: the near term, we're going to see compression. So that's

651
00:31:22,320 --> 00:31:25,680
Speaker 12: the most important KPI right now. In terms of the

652
00:31:25,920 --> 00:31:30,640
Speaker 12: cloud growth rate, as supply comes into online, we should

653
00:31:30,640 --> 00:31:33,520
Speaker 12: see cloud growth rate improve, but most likely in the

654
00:31:33,520 --> 00:31:34,960
Speaker 12: second half of this year.

655
00:31:35,480 --> 00:31:37,320
Speaker 7: On our one of the I guess themes of the

656
00:31:37,400 --> 00:31:40,120
Speaker 7: last quarter or so is these big tech companies just

657
00:31:40,240 --> 00:31:43,720
Speaker 7: ramping up their capex like materially not just a billion

658
00:31:43,760 --> 00:31:45,760
Speaker 7: to here or billionaire, but tens of billions.

659
00:31:46,360 --> 00:31:47,040
Speaker 2: Do we like that?

660
00:31:48,360 --> 00:31:48,600
Speaker 11: See?

661
00:31:48,680 --> 00:31:50,960
Speaker 12: Again, depends on your time horizon if you're going to

662
00:31:51,000 --> 00:31:53,520
Speaker 12: trade till you know, the Super Bowl, but perhaps not.

663
00:31:53,640 --> 00:31:55,960
Speaker 12: But when you think about this business model in the

664
00:31:56,000 --> 00:31:59,600
Speaker 12: long run, you really are creating such a massive mode

665
00:31:59,600 --> 00:32:03,000
Speaker 12: around the businesses with high fixed costs right now. But

666
00:32:03,040 --> 00:32:05,080
Speaker 12: at the end of the day, these had very strong

667
00:32:05,160 --> 00:32:08,120
Speaker 12: unit economics that once you get up your scale, you know,

668
00:32:08,160 --> 00:32:09,680
Speaker 12: you will see a lot of that fall to the

669
00:32:09,680 --> 00:32:12,920
Speaker 12: bottom line, and that creates a bigger barrier for somebody

670
00:32:13,000 --> 00:32:14,120
Speaker 12: to break into this market.

671
00:32:14,640 --> 00:32:17,280
Speaker 3: You know the thing about it, you thinking about an Runa,

672
00:32:17,320 --> 00:32:21,080
Speaker 3: it's great. I mean, you know, you look at his energy.

673
00:32:21,240 --> 00:32:22,920
Speaker 3: You look at all that's going on out there, the

674
00:32:23,440 --> 00:32:25,600
Speaker 3: whole slang thing that Lisa is talking about.

675
00:32:25,640 --> 00:32:26,880
Speaker 2: I mean, he's high energy.

676
00:32:26,920 --> 00:32:29,480
Speaker 3: I mean he's he's like, you know, there's like slang

677
00:32:29,520 --> 00:32:33,040
Speaker 3: within tech for these people that are high strung, wound

678
00:32:33,120 --> 00:32:33,800
Speaker 3: up and all that.

679
00:32:34,200 --> 00:32:36,479
Speaker 2: That's Interact Runna, Interact. Thank you.

680
00:32:36,720 --> 00:32:39,200
Speaker 3: This is really I learned a lot there, really really

681
00:32:39,240 --> 00:32:41,720
Speaker 3: really good. Appreciate it. Interuct Runa on the cloud with

682
00:32:42,880 --> 00:32:44,360
Speaker 3: Bloomberg Intelligence.

683
00:32:49,840 --> 00:32:53,760
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

684
00:32:53,800 --> 00:32:57,200
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

685
00:32:57,240 --> 00:33:00,400
Speaker 1: with the Bloomberg Business app. You can also listen on

686
00:33:00,480 --> 00:33:04,120
Speaker 1: Amazon Alexa from our flagship New York station. Just say

687
00:33:04,240 --> 00:33:07,280
Speaker 1: Alexa play Bloomberg eleven thirty over.

688
00:33:07,160 --> 00:33:07,880
Speaker 2: In tee Live.

689
00:33:08,040 --> 00:33:11,320
Speaker 3: The Bloomberg terminal service for all of our members worldwide,

690
00:33:11,760 --> 00:33:15,240
Speaker 3: and the Kerrn is in charge and he reports to us.

691
00:33:15,240 --> 00:33:20,640
Speaker 3: Now and I'm confused over what was the number revision

692
00:33:21,400 --> 00:33:25,640
Speaker 3: of eight hundred, I'm guessing eighteen thousand. I believe Kevin

693
00:33:25,680 --> 00:33:28,960
Speaker 3: Hassett just told John Farrow it was a million. What

694
00:33:29,080 --> 00:33:30,640
Speaker 3: was the revision statistic?

695
00:33:30,720 --> 00:33:31,160
Speaker 2: Do we know?

696
00:33:32,240 --> 00:33:34,720
Speaker 11: Well? The one that we're running with, Tom, is that

697
00:33:34,800 --> 00:33:39,280
Speaker 11: the revisions show that Joe's market averaged about one hundred

698
00:33:39,280 --> 00:33:42,680
Speaker 11: and sixty thousand jobs a month last year, which is

699
00:33:42,760 --> 00:33:46,120
Speaker 11: below the initially reported one hundred and eighty six thousand.

700
00:33:46,120 --> 00:33:48,400
Speaker 11: So that's the number that we're running with. And I

701
00:33:48,400 --> 00:33:50,760
Speaker 11: also I did hear mister House to make the point

702
00:33:51,000 --> 00:33:53,240
Speaker 11: it was he's counted up to I think he said

703
00:33:53,280 --> 00:33:56,040
Speaker 11: a million odd. But so you know, you can look

704
00:33:56,080 --> 00:33:58,760
Speaker 11: at this two as of course the President Rum's administration.

705
00:33:58,800 --> 00:34:00,960
Speaker 11: You're saying this makes the point that Joe's market was

706
00:34:01,040 --> 00:34:04,360
Speaker 11: weaker than that. Yeah, it looked, and clearly clearly it

707
00:34:04,440 --> 00:34:06,680
Speaker 11: was as a Generald revision. But of course there are

708
00:34:06,680 --> 00:34:10,480
Speaker 11: others who are saying revision it wasn't as material as expected,

709
00:34:10,480 --> 00:34:13,160
Speaker 11: and it still shows overall the jobs marketers has held up.

710
00:34:13,160 --> 00:34:18,640
Speaker 3: Okay, how important getting to March seventh is the fiscal

711
00:34:18,760 --> 00:34:23,360
Speaker 3: state of Endocurrens Washington, We've had a bit of chaos here,

712
00:34:23,840 --> 00:34:26,320
Speaker 3: or I should say a lack of clarity or noise

713
00:34:27,000 --> 00:34:31,120
Speaker 3: in this January report. Is the February report going to

714
00:34:31,120 --> 00:34:32,080
Speaker 3: be even crazier?

715
00:34:33,719 --> 00:34:37,279
Speaker 11: Well, if we are at such early stages of a

716
00:34:37,480 --> 00:34:40,640
Speaker 11: major new policy rollout by this new administration, come that

717
00:34:40,960 --> 00:34:42,960
Speaker 11: it's going to become clear. I mean, it's interesting the

718
00:34:43,040 --> 00:34:46,400
Speaker 11: January figures. There had been some expectation that maybe the

719
00:34:46,600 --> 00:34:49,320
Speaker 11: wildfires or the severe winter weather would have impacted, but

720
00:34:49,360 --> 00:34:52,120
Speaker 11: there was no discernible impact. Now we go into February,

721
00:34:52,239 --> 00:34:54,560
Speaker 11: you look around, what are the variables with one of

722
00:34:54,600 --> 00:34:56,960
Speaker 11: the big talking points of courses, what's happening with the

723
00:34:56,960 --> 00:35:00,319
Speaker 11: federal workforce. We have reported tens of thousands making that

724
00:35:00,400 --> 00:35:03,160
Speaker 11: buyout offer from the government, But will that surface? When

725
00:35:03,280 --> 00:35:05,520
Speaker 11: will that surface and in which month of the data

726
00:35:05,760 --> 00:35:09,520
Speaker 11: for example? So you know, I think for now, the

727
00:35:09,680 --> 00:35:13,040
Speaker 11: jobs data is probably, as you wore, will carry on

728
00:35:13,080 --> 00:35:16,000
Speaker 11: this particular path, subject to what's going on in the economy.

729
00:35:16,000 --> 00:35:19,319
Speaker 11: But when these big policy changes start to impact one

730
00:35:19,320 --> 00:35:21,200
Speaker 11: way or another, that's probably going to take time. I mean,

731
00:35:21,239 --> 00:35:24,120
Speaker 11: can think about it as deportation. There is the trade

732
00:35:24,160 --> 00:35:27,760
Speaker 11: and Tireff's policy, and then there is the what's happening

733
00:35:27,800 --> 00:35:31,120
Speaker 11: with the public workforce. President Trump's team will say that

734
00:35:31,400 --> 00:35:33,480
Speaker 11: will drive investment. You just heard mister has to make

735
00:35:33,520 --> 00:35:35,440
Speaker 11: the same point, it will drive invest in the create jobs.

736
00:35:36,280 --> 00:35:39,680
Speaker 11: Some economists are more cautious on outcomes, so it's like

737
00:35:39,760 --> 00:35:41,360
Speaker 11: a few months become clear, I think.

738
00:35:42,080 --> 00:35:45,040
Speaker 7: And mister has also made the point to a question

739
00:35:45,080 --> 00:35:48,560
Speaker 7: from John Pharaoh, that it was not a trade war

740
00:35:48,719 --> 00:35:51,759
Speaker 7: with Canada and Mexico, it was a drug war. And

741
00:35:51,760 --> 00:35:54,040
Speaker 7: then John followed up with Okay, well, how are you

742
00:35:54,080 --> 00:35:56,759
Speaker 7: going to have these discussions with Europe? What's the view

743
00:35:56,800 --> 00:36:00,000
Speaker 7: from Europe about trade United States?

744
00:36:00,040 --> 00:36:00,120
Speaker 3: Ye?

745
00:36:01,920 --> 00:36:05,480
Speaker 11: Well, I mean it's very interesting because on paper, clearly

746
00:36:05,640 --> 00:36:09,840
Speaker 11: President Trump came along and threatened these tariffs on Canada

747
00:36:10,080 --> 00:36:13,400
Speaker 11: and Mexico at the beginning, at least over the Fenstal,

748
00:36:13,480 --> 00:36:16,560
Speaker 11: the a litle drugs trade and on illegally immigration, that

749
00:36:16,640 --> 00:36:19,880
Speaker 11: was using tariffs as a tool in a space beyond

750
00:36:19,920 --> 00:36:22,880
Speaker 11: the merchandise goods. But I think also as the commentary

751
00:36:23,280 --> 00:36:26,280
Speaker 11: proceeded from the White House progressed, there was also several

752
00:36:26,280 --> 00:36:30,160
Speaker 11: references to the goods deficit with both and particular Canada

753
00:36:30,400 --> 00:36:32,239
Speaker 11: came in for a swing there and at one point.

754
00:36:32,239 --> 00:36:35,280
Speaker 11: There was a reference to Canadian defense spending as well.

755
00:36:36,000 --> 00:36:39,000
Speaker 11: So it's interesting that mister Hassett said, why would you

756
00:36:39,040 --> 00:36:41,439
Speaker 11: have a trade war with your neighbors because it looked

757
00:36:41,440 --> 00:36:43,360
Speaker 11: like they're riding that way last weekend. But he's he

758
00:36:43,440 --> 00:36:44,680
Speaker 11: has narrow the focus back down.

759
00:36:44,719 --> 00:36:47,239
Speaker 3: The Fentanel and the current of our global had a

760
00:36:47,239 --> 00:36:49,640
Speaker 3: global economics and of course all of his work in

761
00:36:49,680 --> 00:36:52,719
Speaker 3: Asia during the pandemic. And I think you've got a

762
00:36:52,760 --> 00:36:57,040
Speaker 3: wonderful prism coming from the Pacific rim over to Washington.

763
00:36:57,600 --> 00:37:01,719
Speaker 3: How Barbell is the American la economy the way we

764
00:37:01,880 --> 00:37:04,799
Speaker 3: describe it, and as the haves the have nots, some

765
00:37:04,880 --> 00:37:06,320
Speaker 3: of us have a certain persuasion.

766
00:37:06,440 --> 00:37:07,360
Speaker 2: Go back to John.

767
00:37:07,280 --> 00:37:10,759
Speaker 3: Edwards on a lawn in Louisiana a million years ago

768
00:37:10,880 --> 00:37:13,360
Speaker 3: talking about two Americas.

769
00:37:13,560 --> 00:37:15,839
Speaker 2: From where where you sit with your team.

770
00:37:16,200 --> 00:37:20,400
Speaker 3: How too much to Americas are we?

771
00:37:20,400 --> 00:37:23,760
Speaker 11: Well, I think there's clearly that is an issue, Tom.

772
00:37:23,800 --> 00:37:26,440
Speaker 11: I mean the headline the I agreate that it does

773
00:37:26,520 --> 00:37:29,920
Speaker 11: point to a strong economy. It's holding up the jobs

774
00:37:30,000 --> 00:37:33,480
Speaker 11: market as we see today holding up okay, and companies

775
00:37:33,520 --> 00:37:37,080
Speaker 11: are hiring, wages going up, and unemployment rate actually fell.

776
00:37:37,200 --> 00:37:40,440
Speaker 11: But clearly, you know there are plenty of people who

777
00:37:40,480 --> 00:37:43,400
Speaker 11: don't necessarily feel like they're experiencing any kind of an

778
00:37:43,480 --> 00:37:46,040
Speaker 11: upswinging the economy. You look at the condoms and how's

779
00:37:46,080 --> 00:37:47,760
Speaker 11: the market, the cost of a mortgage credit.

780
00:37:47,760 --> 00:37:52,560
Speaker 3: Tourists, the recent article the Creid Tourist was absolutely magnificent

781
00:37:52,719 --> 00:37:55,479
Speaker 3: on food lines across this nation.

782
00:37:56,480 --> 00:37:59,759
Speaker 11: That's right, Tom. So there is you know, that chunk

783
00:37:59,800 --> 00:38:03,920
Speaker 11: of the sorry who clearly aren't really any economic uplift,

784
00:38:03,920 --> 00:38:06,000
Speaker 11: And we saw it in the election results. You know,

785
00:38:06,680 --> 00:38:09,200
Speaker 11: on paper, a strong economy going into last year's election,

786
00:38:09,280 --> 00:38:10,759
Speaker 11: but of course we now know that people are very

787
00:38:10,840 --> 00:38:13,400
Speaker 11: upset about the price and the cost of living. So

788
00:38:13,960 --> 00:38:17,120
Speaker 11: clearly this new administration has an opportunity to address a

789
00:38:17,120 --> 00:38:19,239
Speaker 11: lot of that, and they have identified living costs and

790
00:38:19,280 --> 00:38:23,200
Speaker 11: inflation as one of their key priorities for example. But

791
00:38:23,360 --> 00:38:25,600
Speaker 11: of course the question is the balancing act. Can they

792
00:38:25,600 --> 00:38:27,239
Speaker 11: pull off all of these big believers that they want

793
00:38:27,239 --> 00:38:29,480
Speaker 11: to pull without also hurting the economy. That's going to

794
00:38:29,480 --> 00:38:30,080
Speaker 11: be the big drink.

795
00:38:30,400 --> 00:38:33,879
Speaker 2: And the Chiefs are eagles, I.

796
00:38:33,840 --> 00:38:37,600
Speaker 11: Think probably as a grateful guest here tell them. I'll

797
00:38:37,600 --> 00:38:40,520
Speaker 11: go with the Chiefs. But I'm no expert on NFL apps.

798
00:38:41,600 --> 00:38:44,400
Speaker 3: We can't many with the Chiefs, currents going with the

799
00:38:44,520 --> 00:38:48,880
Speaker 3: Chiefs there and the current thank you so much, t

800
00:38:49,120 --> 00:38:52,279
Speaker 3: Live just precious, can't say enough about it at Christansian

801
00:38:53,920 --> 00:38:57,279
Speaker 3: and the current out on Tea Live with really good analysis.

802
00:38:57,320 --> 00:38:59,000
Speaker 2: For the users of.

803
00:38:58,960 --> 00:39:04,040
Speaker 1: The Bloomberg termin This is the Bloomberg Surveillance Podcast, available

804
00:39:04,080 --> 00:39:07,759
Speaker 1: on Apple, Spotify, and anywhere else you get your podcasts.

805
00:39:08,280 --> 00:39:11,759
Speaker 1: Listen live each weekday, seven to ten am Eastern on

806
00:39:11,880 --> 00:39:15,759
Speaker 1: Bloomberg dot com, the iHeartRadio app tune In, and the

807
00:39:15,800 --> 00:39:19,400
Speaker 1: Bloomberg Business app. You can also watch us live every

808
00:39:19,400 --> 00:39:22,840
Speaker 1: weekday on YouTube and always on the Bloomberg Terminal